Accounts receivable is a current account that reflects money your company has earned, but hasn't yet been paid. This account is strongly tied to cash flow in that payment on account is a contrast to payment with cash. Your accounts receivable policies impact how quickly you generate cash flow on sales.

Minimize Payment Accounts

One of the more obvious ways to potentially increase cash flow is to simply eliminate or minimize payments on account. By allowing your customers to pay on account, you give them an alternative to paying cash. A cash-only financial approach ensures that you only sell goods and services to cash buyers. The risk in making this move is that you could see a significant reduction in buying activity.

Offer Incentives

A common practice with vendors is to offer cash discounts as an incentive to get customers to pay more quickly. A typical discount is 2 percent. You might offer this to customers who pay bills within 10 days, for instance. Customers making sizable purchases may see value in paying more quickly. A 10-day turnaround on a significant percentage of your accounts receivable would have a strong impact on cash flow.

Penalize Late Payments

In general, strict receivable policies can expedite payments. In addition to offering incentives for fast payments, companies also can penalize late payers. Net-30 or net-60 day payment periods are standard. If you offer a 30-day interest-free payment period, a policy of charging interest for any days after the grace period may cause more buyers to pay in a timely manner. Getting the majority of your payments within 30 days can lead to strong cash flow relative to sales.

Additional Cash Flow Tactics

Before opening an account for a buyer, checking references can help ensure that you only use receivable accounts for reputable customers. Scheduled payment calls beginning after the regular payment period can also help you drive faster payments. Even a simple customer-friendly tactic like including a stamped, self-addressed business envelope when you submit invoices can make it easier for a buyer to make a quick payment.